DLJ Surpasses Expectations as Revenues Soar 67%
Donaldson, Lufkin & Jenrette
(DLJ)
, the leading high-yield bond underwriter, easily flew past analysts' expectations Wednesday, reporting net income had more than doubled in the first quarter as revenues jumped 67%.
The gains were led by a surge in revenues at the investment firm's new international equities unit.
New York-basd DLJ posted net income of $245.2 million, or $1.72 a diluted share, compared with $121.7 million, or 84 cents a share, in the first quarter of last year. Analysts polled by
First Call/Thomson Financial
were expecting $1.29 a share in the latest quarter, with the highest estimate at $1.50.
On Tuesday,
DLJdirect
(DIR)
, the company's online brokerage arm, set the tone by
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exceeding Wall Street's expectations with nearly four times the net income compared to the year-ago quarter.
In morning trading, DLJ fell 1/2, or 1%, to 42 1/2, as much of the market reaction came after DLJdirect's results Tuesday when its shares popped 9%. (DLJ closed down 3, or 7%, at 40.)
Joe Roby, president and chief executive of DLJ, and John Chalsty, the chairman, said in a joint statement the quarter was a "blockbuster" with revenue growth across the board and substantially better margins and returns on equity.
DLJ's revenues rose $1 billion, to $2.5 billion in the first quarter, compared with $1.5 billion a year earlier, with the strongest growth coming from the year-old international equities unit.
Europe became a hotbed of investment and merger and acquisition activity over the past year, as telecommunications companies sprouted and consolidated at a brisk pace.
Net revenues from DLJ's foreign business, which the international equities unit is an integral part, nearly tripled to $385.3 million in the first quarter compared with $141 million the year earlier.
Worldwide trading volume cranked up revenues in the financial services group, which includes traditional brokerage and asset management as well as
Pershing
, DLJ's trade clearing business. Net revenues soared 66%, to $675.5 million, with pretax profits of $170.5 million, up 88%.
Under DLJ's banking group, net revenues increased 70%, to $548 million, while per-tax profits almost doubled to $154.4 million.
Net revenues from underwriting, however, fell $6 million, or 2%, to $250.6 from fewer companies issuing high yield bonds in the period. DLJ still owns the largest share of that market with 19.2%.
